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Very few entrepreneurs consider their exit plan when trying to get their business off the ground. The last thing on your mind is how to leave this company you’ve built with hard work, inspiration, and determination.

But nothing lasts forever, meaning an exit plan should be germinating from the very start. Here are some of the most common strategies and how they can work in a well-crafted succession plan:

1. Transfer to Family

Many business owners choose this option to build their exit strategy around, and it’s not hard to figure out why.

It’s a plan that meets several positive objectives at the same time: you can pass your valuable assets on to your family, maintain a certain level of involvement in the company you have been invested in for so long, and you may even be able to continue to draw an income from the business (depending on how you left).

It also comes with some uncertainty; if you don’t have a family member with the skills or desire to take on the business, it could leave things in a state of disarray. It could also result in infighting and dissension amongst the family.

2. Selling to a Financial Buyer

When using this as the exit strategy, it’s important to have a pre-plan in place that grooms the company for the highest value possible. Even smaller, family-run companies can choose this strategy, particularly if no one else in the family has an interest in taking the reins.

It provides an option to the owner’s heirs, giving them financial liquidity with which they can do as they like. In some financial buyer sales, a clause will be invoked to keep the seller in place, operating the business, for a specified period of time after the sale has gone through.

3. Strategic Buyer Sale

In the event of a merger, shareholders will usually take stock in the bigger of the two companies. While this provides them with the best possible outcome, it often leaves shareholders without cash for a certain time period following the sale, meaning they must prepare financially for said period.

Since the seller may have signed a non-compete clause, it could prevent them from operating a new business in the same field. There are limitations, but if a business owner or shareholder can use a larger company’s acquisition as an exit strategy, it can be profitable.

4. Employee Buyout

While this is seldom as profitable as selling to a strategic or financial buyer, there are advantages to selling to employees and/or managers. For one, it could preclude the need to sell the entire business at one time, allowing for a slower, more considered exit strategy.

Furthermore, the experience of the employees can do wonders for the continued success of the company, something that may be of high importance to anyone who wishes to establish a meaningful legacy. On a more practical level, employee buyouts can be used for considerable tax advantages.

5. Asset Liquidation

Should your company meet the legal requirements for such a plan, asset liquidation could be a viable exit strategy. Instead of selling the company whole, you can go liquid instantly, close the doors, and sell off the assets.

In some cases, this may not only be the best choice – it might be the only one. If your contribution to the business is so substantial that the company would not have any value without your involvement. Unfortunately, asset liquidation is often the least profitable of the available exit strategies.

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